1/28/2016 – A positive day with the Dow Jones up 125 points (+0.78%) and the Nasdaq up 38 points (+0.86%)
….perhaps to new all time highs?
That is certainly possible and it would make sense to explore this notion further. Here is a good take on a subject matter.
First, investor sentiment is definitely point towards a reversal.
As I have mentioned here over the last few weeks, most sentiment indicators are oversold and point to some sort of a rally. As the chart above suggests. Some of these indicators are at extreme levels. Perplexing some of the bulls/bears, including yours truly, as to why the bounce thus far has been so weak.
Opposing View: While sentiment indicators point towards a reversal, it is not set in stone. At certain times markets can decline substantially while sentiment indicators stay relatively flat. Most of the crashes or bear market acceleration points have started under oversold conditions. If it was as easy as going long now, well, everyone would be making money hand over fist.
Second, the structural sell-off off of November 3rd, 2015 top is riddled with massive down gaps. So much so that the Dow in particular looks like a pound of Swiss cheese. With gaps all the way up to 17,500. Actually, the Dow still has an unfilled gap as high as 18,100 from June of last year.
Why is that important?
Markets tend to close their gaps. That in itself suggests a massive rally ahead. But that doesn’t guarantee a rally either. While most of these gaps will have to be closed, there is no written rule on when. It might be years and only after a much larger market sell-off plays itself out.
Finally, some sort of a oil rebound can send the market surging higher. Right? Maybe. We have discussed oil in our earlier post today. And while the correlation is likely to hold both ways, there is no indication that oil prices have bottomed. As I have mentioned earlier, oil might push much lower. Dragging the stock market lower, not higher.
That is to say, while there are quite a few indicators pointing towards a massive rally, the market might fail to deliver. At the very least, “Buy the Dip” crowd should be very cautious here.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.
(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update.January 28th 2016 InvestWithAlex.com
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
